'I think my journey was to spend a while away from acting' - James Fox. Photograph: David Levene

Over water and Polo mints, James Fox recalls shooting the new Harmony Korine film, Mister Lonely, a story about a group of flying nuns in Africa and a commune of celebrity impersonators in the Scottish Highlands. "You've heard about the gnats, of course?" His voice is soft and clipped as an English country lawn. "Extraordinary gnats in Scotland," he says. "We literally had to wear masks just to go and have lunch." Fox, of course, is a senior member of what is often referred to as the Fox Acting Dynasty, a familial sprawl that includes his parents, Robin Fox and Angela Worthington, his brothers Edward and Robert (an actor and a producer respectively), his niece, the actor Emilia Fox, and his son, the actor Laurence Fox (who recently married Billie Piper).

He began acting as a child. "It paid for a bicycle, I seem to remember." And throughout the 1960s, his career was in the ascendant; he won acclaim for his roles in King Rat, Thoroughly Modern Millie, Isadora, and - most famously - Performance, Donald Cammell and Nic Roeg's portrayal of swinging London, in which he starred opposite Mick Jagger and Anita Pallenberg.

After Performance, Fox suffered a nervous breakdown, found God and, to the astonishment of those who saw him as one of the great talents of the age, stopped acting. "It was just part of my journey," he says, placidly.

"I think my journey was to spend a while away from acting. And I never lost contact with it - watching movies, reading about it ... so I didn't feel I missed it."

For all his success, he remembers his 20s as a period of professional uncertainty, with long stretches spent out of work, disappointing stints in theatre, and a couple of unsatisfactory film roles. "I had done Isadora," he says, "and that had been a very difficult experience, I hadn't been very turned on by that. I don't know why - I really wanted to work with [director] Karel Reisz, but I just didn't feel very excited by the way it was turning out."

He worked with other great directors - Roeg, Tony Richardson, Joseph Losey - "and all of those things had been tremendous. But I wasn't thinking, 'What a great time I'm having.' What I would have missed was working on a great project, but there weren't any great projects around at the time I left."

However, Performance was a great project. "I was very excited about it," Fox recalls. "It was flattering, because I'd worked with Cammell before [he wrote the script for Duffy], and he literally said, 'I'm creating this part for you.' Well, after Marlon Brando dropped out, he did. He wrote it with me in mind. And this is the best way to create films between directors and actors. You can see it with Paul Thomas Anderson and Daniel Day-Lewis - you can see the respect, the affection, the sparks that fly."

Then came what Fox refers to as "this conversion experience". "I had a couple of very bad experiences with the theatre," he says. "I actually tried to connect my faith with the theatre, in a production of [TS Eliot's] Murder in the Cathedral in Canterbury. People tried to help me connect my faith with drama, whatever Christian drama there was. They thought maybe I could go that way. But none of those things ever turned me on." Instead, he went to work with an outreach Christian ministry called the Navigators.

In his new film, Fox plays a Pope impersonator, a curious figure who is at once grand and dishevelled, alternately shouting at the sky and sitting in bathtubs in the garden, weeping; it's a part that nods to, and draws upon, Fox's own religious experience. He says his conversion was kindled by "a need, and exposure to a grown-up connection with the scripture, and with other people who seemed to have this reality of God in their daily lives".

He speculates that the Pope character "probably had a very strong religious period and then probably a long period of institution". While the shared religious experience was useful in playing the part, Fox says: "I couldn't project my experience into a Catholic one, because my experience was more in the Protestant church."

Playing the Pope was a strange experience. "Almost immediately, I put the costume on and I decided that he should be Pope John Paul, and that was important, that it was actually that Polish pope. It was a very fruitful and an endlessly interesting, imaginative exercise. And I thought he fitted quite well into the commune. He's clearly a very strange man, but then they all are."

Indeed they are: Korine's imaginary commune includes Madonna, the Queen, Abe Lincoln, Charlie Chaplin, who is married to Marilyn Monroe (played by Samantha Morton), with Shirley Temple for a daughter. They occupy a huge castle, rear sheep and roll about the grounds, united by a common goal to build a theatre so that they might put on a performance for the local villagers. Everything they do - whether it's tai chi in the garden or stand-up routines on their rickety stage - is infused with a sense of melancholy.

Is there any real difference, I ask Fox, between impersonators and actors? "Well," he says, "impersonators take a giant leap away from reality; they just want to deny it altogether. Actors have to cope with reality. The ones I'm fascinated by are the ones who model completely still on [London's] South Bank. Aren't they interesting? Beautiful, aren't they? Funny thing is they can come straight out of it. I saw one of them at the end of the day, just walking away. But I don't think they're lost - this film is about lost people."

The film's sadness appealed to Fox, as did the chance to work with Korine, the 35-year-old director of Gummo and Julien Donkey-Boy. "I liked the script very much; it was very original," he says. "And I heard from my young family, and they knew his work - they said he was a wonderful director with a lot of brilliance."

It also reunited Fox with Anita Pallenberg, his co-star in Performance, this time playing the Queen. "It was lovely," Fox says sweetly. "I had seen her on and off a few times over the years, but we were both projected into the most amusing characters to have to put on."

Naturally, Korine had fun with the Fox-Pallenberg scenes. "Harmony is a master improvisor," Fox smiles. "In some ways, I wish more improvisation had stayed in the film. There was a very nice scene I was involved in with Anita. She was smoking a spliff with Sammy Davis Jr, and the Pope was kind of passed out and snoring and she's talking in this low whisper and ..." He laughs. "Then Harmony had these wonderful lines that he fed to Anita. He'd say, 'You know, before he found God, he used to have such a great body and then he let it go. Just say that to Sammy Davis Jr.' And she would be saying these things and cracking up, and, of course, I couldn't not crack up myself." Sadly this scene didn't make the final cut.

Like all Korine's films, Mister Lonely will no doubt divide audiences: its two narratives never come together, and while the film carries all the weight of a message - musing on the nature of faith and celebrity, society and the individual - it offers little in the way of elucidation.

"I'd like to know," Fox says, "just before we go, just what you felt it was about?" We muddle our way uncertainly through its themes. "Perhaps," he offers, "it's that our showbiz idols have become the icons and the idols of a postreligious Europe, that there has to be something to fill one's need and admiration and faith?"

He adds, hesitantly: "I think that, because people aren't sure who they are, they become very obsessed with who other people are, and want to live vicariously through them. And technology now allows us to do that. Before, we would have had to do that through our imaginations and literature, which is not as harmful. I think it's a film which will define that angst." He looks momentarily puzzled, laughs a little sheepishly, and quietly puts away his Polo mints.